Magnetic Ink Character Recognition (“MICR”) is an optical character recognition technology that banks use in processing checks. MICR data is printed in magnetic ink at the bottom of each paper check. For example, the MICR data can include the payor bank's routing transit number, the check writer's (check maker's or drawer's) account number, and a check number. A bank can electronically capture MICR data from a check using a MICR reader, which can read the data printed in magnetic ink on the check. The bank can use the electronic MICR data to settle the check between an account of the depositing institution (referred to herein as “payee”) and an account of the receiving institution (referred to herein as “payor”). The term “bank” is generally used herein to refer to any party performing conventional or electronic check processing at any stage, including depositing and receiving institutions, their non-bank subsidiaries and affiliates, and any non-bank third party agents that provide processing services to banks.
In processing a check, a bank can store captured MICR data and other relevant data (collectively referred to herein as “financial data”) in various fields of a financial data file for further check processing. The financial data can comprise information incidental to the check processing, such as a unique item sequence number, a check processing site identifier, a processing date, a check amount, and a routing transit number of the depositing institution. Capture software of the MICR reader can capture and/or generate such incidental data upon MICR data capture. As used herein, the term “financial data file” is generally used to refer to an electronic file that complies with the American National Standards Institute Specifications for Electronic Exchange of Check and Image Data (ANSI X9.37/X9.100), or other appropriate industry standards, as may change from time to time.
The bank can store the financial data in seven data fields, labeled F1-F7. The data stored in the financial data file can comprise the check amount stored in field F1, process control data stored in field F2, an account number stored in field F3, a check number stored in field F4, a routing transit number stored in field F5, an external processing code stored in field F6, and “auxiliary on us” data stored in field F7. Fields F2-F4 are collectively referred to herein as the “on us field.” The data in the on us field is referred to herein as “on us data.”
Conventionally, each field is respectively designed to accommodate a set number of characters without extraneous information such as dashes. Accordingly, prior to storing the financial data in the respective fields of the financial data file, the bank truncates all extraneous information and all data beyond the allowed number of characters in each field. The bank typically truncates the data in fields F2, F3, F4, and F7.
In addition to capturing and storing financial data, the bank also can capture electronic images of the front and back of each check via an image capturing device such as a scanner or a camera. The images can be used for various services in check processing. For example, by agreement, a bank might accept an image of a check for presentment or other purposes, instead of the actual paper document. The check images and associated data in fields F1-F7 provide sufficient information for those banks operating under the agreement to process a check for payment.
Effective Oct. 28, 2004, the Check Clearing for the 21st Century Act (“the Act”) improves the ability of banks to use electronic images of paper checks by, for example, submitting those images, along with associated financial information, for electronic processing. The electronic images and financial data can be used to create a paper copy or “substitute” of the original check. Under the Act, a paper “substitute check” meeting specified requirements is a legal equivalent of an original paper check, and a receiving institution is required to accept the substitute check for payment. Under the Act, the substitute check must be essentially an exact copy of the original paper check. In particular, the substitute check must include an exact copy of all of the MICR data provided on the paper check and all endorsements.
Because banks conventionally have truncated the MICR data during check processing, they have been unable to produce a substitute check that comprises all of the MICR data provided on the original paper check. Thus, a need exists in the art for a system and method of processing checks, whereby banks can generate substitute checks that comply with the requirements of the Act (herein including applicable related regulations and industry standards). Specifically, a need exists in the art for capturing the complete MICR data for future use in creating a substitute check that meets the requirements of the Act. Additionally, a need exists in the art for integrating the capture of complete MICR data with conventional check processing methods to avoid a complete redesign of conventional systems.